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A Place for Us Presentation (June 22, 2007)

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This slide show describes some of the challenges facing Athens, GA and some of the surrounding areas in terms of housing. It was presented in mid-2007.

Published in: Real Estate
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A Place for Us Presentation (June 22, 2007)

  1. 1. A PLACE FOR US: THE CHALLENGES OF HOUSING IN ATHENS AND SURROUNDING AREAS Andy Carswell, Ph.D. Dept. of Housing & Consumer Economics University of Georgia June 22, 2007
  2. 2. OUTLINE FOR DISCUSSION • Affordability defined • How is it measured? • Some of the culprits behind the problem • Potential solutions
  3. 3. HOUSING AFFORDABILITY • Broadly Defined  The relation of a consumer’s housing costs to his or her available resources. • Tightly Defined  Usually done through established industry indicators
  4. 4. HOUSING OPPORTUNITY INDEX • Measures the % share of homes that a median- income household can afford in a city/metro area • The higher the index value, the greater the degree of affordability that exists within a certain market • Ranks only the metropolitan areas
  5. 5. Housing Opportunity Index: 4th Quarter 2006 By Affordability Rank HOI 4th Qtr 2006 2006 4th Qtr 2006 4th Qtr 2006 Metro Area Share of Homes Median Median Affordability Affordable for Family Sales Rank Median Income Income Price National Regional (000s) (000s) Springfield, OH 90.7 55.4 90 1 1 Davenport-Moline-Rock Island, IA-IL 89.8 60.1 87 2 2 Bay City, MI 89.6 55.8 85 3 3 Mansfield, OH 89.1 52.7 83 4 4 Canton-Massillon, OH 89.0 54.9 93 5 5 Indianapolis, IN 89.0 65.1 113 5 5 Lima, OH 89.0 52.2 81 5 5 Lansing-East Lansing, MI 88.4 64.9 105 8 8 Youngstown-Warren-Boardman, OH-PA 88.0 52.1 83 9 9 Detroit-Livonia-Dearborn, MI ^^^ 87.8 56.7 92 10 10 Battle Creek, MI 86.9 55.2 86 11 11 Flint, MI 86.5 57.8 100 12 12 Saginaw-Saginaw Township North, MI 86.4 53.8 90 13 13 THE AFFORDABILITY “HIGH FLYERS”
  6. 6. HOI 4th Qtr 2006 2006 4th Qtr 2006 4th Qtr 2006 Metro Area Share of Homes Median Median Affordability Affordable for Family Sales Rank Median Income Income Price National Regional (000s) (000s) Atlanta-Sandy Springs-Marietta, GA 68.2 68.1 183 54 13 HOI AFFORDABILITY “THE DIRTY DOZEN” El Centro, CA 6.8 43.3 280 191 54 Riverside-San Bernardino-Ontario, CA 6.8 57.5 391 191 54 Modesto, CA 6.1 54.4 360 193 56 Santa Barbara-Santa Maria, CA 5.3 65.8 519 194 57 New York-White Plains-Wayne, NY-NJ ^^^ 5.1 59.2 500 195 40 Santa Cruz-Watsonville, CA 5.1 75.1 665 195 58 San Diego-Carlsbad-San Marcos, CA 5.0 64.9 475 197 59 Merced, CA 4.7 46.4 325 198 60 Napa, CA 4.3 75.0 588 199 61 Santa Ana-Anaheim-Irvine, CA ^^^ 4.0 78.3 620 200 62 Salinas, CA 3.7 62.2 580 201 63 Los Angeles-Long Beach-Glendale, CA ^^^ 2.0 56.2 525 202 64
  7. 7. NAR’s AFFORDABILITY INDEX • More established than NAHB index • Ratio of the median income to the minimum income required to qualify for a conventional loan covering 80% of median existing home price • Index value of 110 means that a family earning median family income has 110% of income necessary to qualify for an 80% loan • Only 22 metro areas covered under the index
  8. 8. NLIHC’S “Out of Reach” Index • Points out that there is an overemphasis on housing prices, not rents. • Covers every MSA • Calculates the hourly wage a HH must earn in order to afford a rental unit at the area’s FMR • Assumes that a HH pays no more than 30% of income for housing costs
  9. 9. RESULTS OF NLIHC’s “OUT OF REACH” INDEX – ATHENS, GA ATHENS % renter 43% AMI $52,900 30% AMI $15,870 FMR (2 BR) $ 665 Est. Hsg. Wage $ 12.79 GEORGIA 33% $58,203 $17,461 $ 679 $ 13.05
  10. 10. HOUSING AFFORDABILITY Non-Traditional Methods of Measuring the Affordability Problem - Mortgage delinquency and foreclosure rates - Rent-burden statistics - Mortgage types originated - Doubling up/overcrowding - Other home expenses
  11. 11. Athens Living Wage Housing $622 Food $405 Child Care $880 Transportation $275 Health Care $335 Other Necessities $277 Taxes $268 Monthly Total $3,062 Annual Total $36,744 % of People in GA living below family budget line 25.6% or 451,000 people Monthly Expenses for One Parent with Two Children in Athens, GA Source: Economic Policy Institute; Basic Family Budget Calculator.
  12. 12. Georgia Labor Categories & Earnings JOB CATEGORY # of Jobs Mean Salary Local Government 398,961 $32,864 Accommodations & Food Service 332,887 $14,456 Administrative & Waste Services 281,210 $28,548 Retail Trade 460,002 $24,596 First Year Teachers 7,500 $30,441 A $30,000 annual salary will qualify an individual for a $90,000 mortgage. From Georgia Employment and Wages 2005, Produced by the GA Dept. of Labor and Georgia Department of Education.
  13. 13. SO, WHO’S TO BLAME FOR THE AFFORDABILITY PROBLEM? • Land as a finite resource • Government infatuated with homeownership • Liberalized financing of mortgages • Building codes • Mortgage fraud • Suburbanization • Housing norms • Inflexible nature of market rents • Lack of availability of Section 8 • Growth of subprimes • The dominance of the “stick-built” market
  14. 14. POSSIBLE SOLUTIONS TO AFORDABILITY PROBLEM • Solid, yet realistic, homeownership counseling programs • Reducing the stigma of manufactured housing • Reducing the influence of the sub-prime market • Living wage campaigns • Land trusts • Housing trust funds
  15. 15. The Big Picture: Workforce Housing 1. There is very limited housing choice in rural Georgia and a significant proportion of Georgia’s rural workforce is dissatisfied with their housing situation. 2. Housing construction is virtually nonexistent in nearly one-half of Georgia’s counties. The near absence of housing construction activity contributes to both the lack of choice and to the aging of the existing stick-built housing stock
  16. 16. The Big Picture: Workforce Housing 3. The mix and lack of availability of workforce housing in rural Georgia is influenced by a number of factors including: • Credit worthiness of potential buyers • Low profit margins in the development of affordable housing • Relatively small size of local housing markets • Inadequate infrastructure to support housing development • Lack of knowledge about housing assistance program • Lack of available land • Land development codes such as zoning and subdivisions
  17. 17. The Big Picture: Workforce Housing 4. Economic development in rural Georgia is suffering because of the inadequate supply and mix of workforce housing. 5. If workforce housing needs are not addressed, the lack of housing choice combined with an aging housing stock and inadequate infrastructure will virtually preclude many counties from realizing their economic development potential.
  18. 18. The Big Picture: Workforce Housing 6. Existing market incentives alone are insufficient to attract private sector housing builders and developers. In addition, existing publicly financed housing incentives are too limited to adequately address the state’s workforce housing needs. 7. Consumers and employers are generally unaware of existing housing programs and resources. In addition, there is a lack of awareness and replication of successful housing models.
  19. 19. The Big Picture: Workforce Housing 8. Greater understanding and local leadership is needed at the local level to address workforce housing needs. 9. There is insufficient information to address housing related issues, and to identify strategies and initiatives that could expand housing choice, housing quality, and housing affordability in rural Georgia. 10. Current housing programs and funding are insufficient to meet the current and potential demand for workforce housing.

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